Nearly half of all employees in the sector are foreign nationals who either reside in Switzerland or commute across its borders to work, according to the Swiss Watch Industry Federation.

"We need this labour and these skills, and it is true that there is some concern around this vote," head of the federation, Jean-Daniel Pasche, told AFP this past week at Baselworld, the world's largest watch and jewellery fair.

Last month, 50.3 per cent of Swiss voters decided to void a pact giving equal footing to European Union citizens in the Swiss labour market.

It remains unclear how Switzerland, which is not a member of the EU but counts the bloc as its main trading partner, will implement the decision.

Swiss business and financial sector have been busy lobbying lawmakers to consider a broad interpretation when putting the initiative into law, insisting on the need to bring foreign workers into the wealthy Alpine country, which last month registered an unemployment rate of just 3.5 per cent.

Switzerland's iconic watch industry could be especially hard-hit, since it was struggling even before the vote to bring in enough workers to help sustain the soaring growth it has experienced in recent years.

Swatch Group, the world's leading producer of timepieces, for instance boosted its workforce in Switzerland by some 900 people last year alone.

Certified watchmakers, micro technicians, stone-setters and guillocheurs, who engrave intricate decorations onto the dials: the watchmaking craft requires a broad range of very specific skills, and it is no easy task to fill positions in the industry.

Not enough qualified people

"We can't work without the 'border-crossers'," insisted Marc Hayek, head of Swiss Group's luxury brands Breguet, Blancpain and Jacquet Droz.

"I look everywhere, but even before the new limitations, we couldn't find enough qualified people," he told AFP.

The issue of recruitment is an even bigger issue for many other watchmakers.

They have been forced to invest heavily in production since Swatch Group, which is also the world's biggest maker of watch components, reached a deal with Swiss competition authorities allowing it to progressively reduce its deliveries to competitors.

Tag Heuer, the top watch brand in French luxury group LVMH's stable, has thus recently opened a new component factory in Chevenez, just six kilometres from the border with France.

The limitations imposed by the Swiss vote will not force the brand to pare back its plans, insisted Tag Heuer chief Stephane Linder, insisting the company would continue to recruit on both sides of the border.

"It will just mean more red tape," he told AFP, pointing out that once the decision becomes law, companies will need to prove they could not find qualified Swiss workers to fill a post given to a foreigner.

Many industry insiders gathered at Baselworld meanwhile said they expected Bern to find an "intelligent" way of implementing the new rules so it did not cause too much pain for one of the country's key industries.

"Mass immigration or not, the government will have to accept that companies develop and that they need a workforce," said Jean-Claude Biver, who heads niche watch brand Hublot, which also belongs to LVMH.

Patek Philippe chief Thierry Stern also said he was convinced lawmakers would show the necessary flexibility.

"If we can no longer hire cross-border workers, the companies may as well lock up shop," he said, stressing: "I'm not worried, because they will be forced to find solutions."